Should I do an inventory?

I see many landlords who have been managing their properties themselves for years, who say "I've never done an inventory, I can't see the point, there is nothing in the property and when there has been damage I have just repaired it"......http://www.martinco.com/estate-agents-and-letting-agents/branch/exeter/news/the_importance_of_having_an_inventory-7759

This months’ investment tips

Buy to Let Mortgages

·         I’ve come across one or two Estate Agents that insist that you take out your mortgage through them as a condition of you buying one of their properties. This practice is illegal and you would be well advised to avoid this unscrupulous practice. In fact please report any offending estate agents/brokers  to the Property Ombudsman   https://www.tpos.co.uk/

·         Always ask if your mortgage broker / advisor is looking at the whole market for the best and most suitable deals. Some estate agents and mortgage providers will only promote the mortgages they get the most commission on resulting in you not getting the best and most suitable deal available 

·         Some estate agents will charge you for mortgage advice. Don’t deal with them as free advice is available from a number of other companies

Have your business plan figures to hand when talking to your preferred mortgage provider. Details such as your available deposit, monthly rental income forecast, details of any other mortgages you have. A summary of any other income and expenditure you have.

The following formula is used by a number of lenders to calculate your affordability rating:  

·         Loan Amount x Stress Rate x 125% divided by 12 – the result must generally be less than the monthly rental yield.

o    So as an example, the majority of lenders use a stress rate of 5.99%, so assuming a loan amount of £100,000, the formula is as follows:

o    £100,000 x 5.99% x 125% divided by 12 = £623.95 (Minimum monthly rental yield)

Note - Always talk to your preferred mortgage provider as they may have deals that allow some flexibility in the above calculation

 (Information kindly provided by South West Mortgage Brokers)     

To calculate a gross yield, calculate the annual income, e.g £700pcm x 12 = £8400.  Divide this by the property value, e.g £150,000; 8400/150,000 = 0.056.  Finally, times this figure by 100 = 5.6%.  To work out a net yield, deduct your expenses from the annual income at the start.

Welcome to 2016 by Chris Perring

I thought I would start this year by updating you on why Exeter and the surrounding areas continue to be a good place to invest in property.

Firstly some statistics: Devon, with an overall average house price of £236,191, was similar in terms of sold prices to nearby Cornwall (£239,572), but was cheaper than Somerset (£252,023) and Dorset (£286,108).

In the past year house prices in Devon were 4% up on the year before and 7% up on 2007 when they averaged at £220,043. (Source Rightmove)

 

House prices in Exeter during the past decade have grown almost 49% more than the rest of the region.  Average yields for the Exeter area generally vary between 3.7% and 6%+.

Exeter is the capital city of Devon and provides the county with a central base for education, medicine, religion, commerce and culture.

The city is also home to the Met Office and one of the country’s top ten Universities.

Prices in the city picked up last year, in part spurred on by the shortage of houses for sale in the region. Apart from being a good growth area to invest in, buyers and tenants benefit from the excellent national / international transport links and the growth of available employment from existing businesses expansion and the reallocation of business to the area from other parts of the country.

We have a number of owners and tenants who regularly commute outside Devon to work. Mainline rail connections allow you to be in central London by 9.00 am and back again for an evening meal. From Exeter International Airport you can fly to most British and European cities.

Over recent times Exeter has seen major growth in employment the building of the Peninsula Medical School, the first new medical school for 30 years, and the Meteorological Office relocating its entire operation to Exeter from Berkshire – the largest IT move in Europe at the time. Expansion of Exeter International Airport and the development of a major new science park which has already attracted new and existing businesses relocating to the area such as the blur Group.

Exeter’s retail, shopping and food outlets continue to grow and provide for greater employment opportunities with recent opening of a new John Lewis store and projects like the refurbished Princesshay shopping area which has recently been given a £133 million revamp, the Award winning Gidleigh Park chef Michael Caines opening the restaurant Michael Caines at nearby Abode Hotel and Jamie Oliver recently opening his “Jamie's Italian” restaurant.

Further developments include the Guildhall shopping centre which is currently undergoing a £12 million upgrade to include the creation of a brand new dining destination in the heart of Exeter. Scheduled to open in May this year, and the £26 million pound planned development of the current bus station area into a new swimming pool and leisure complex, due to open in 2018.

Clearly to support the increase in employment opportunities Exeter has a number of new housing developments in planning or in progress. The biggest development is Cranbrook, a New Town sited on the eastern boundary of Exeter.

With 2000 new homes, shops and two new schools already built and a further 6000 homes being completed by 2031, Cranbrook is fast becoming a thriving community. The new Cranbrook rail station is now open, providing direct rail links to London.

Offering yields from around 4.5%, Cranbrook has been and still is a favorite for Buy to Let investors. The new properties are so popular some are being let off plan as prospective tenants look to secure a new home. The recent stamp duty changes have not so far put off investors as the developers look to “do deals” to ensure their houses keep selling.  We continue to see a high demand for these properties.

This is just a brief taste of how Exeter is growing both in employment and property investment opportunities. During 2016 we will be looking at how the Exeter property market is expanding and highlighting the ups (and downs).

In this year’s newsletters we will continue to keep you up to date on property investment legislative changes and opportunities. We will also be featuring case studies from landlords and investors looking at their investment experiences and specific housing topics starting next month with student accommodation and how this is changing.

I hope you will continue to find theses newsletters informative, please feel free to contact me with your own stories good (and bad).

Chris Perring Managing Director Martin & Co (Exeter)